According to a statement released today by the National Milk Producers Federation, the recent revelation that nonfat dry milk prices were not accurately reported in monthly government surveys is evidence that USDA needs to do a more thorough, methodical job of reviewing the product pricing and inventory data it collects.
Last week, USDA said that the National Agricultural Statistics Service (NASS) had been collecting price data on nonfat dry milk sales that did not accurately reflect current market prices for the product. NASS officials will now go back 52 weeks to review pricing data for other nonfat dry milk sales in an attempt to clarify the veracity of its historic pricing data. Those reported prices are part of the information used to calculate the price that farmers receive each month in their milk checks.
NMPF says that the reporting error “is yet another example of why we need to finally implement mandatory auditing of product prices and inventories,” according to Jerry Kozak, NMPF president and
In October 2000, Congress passed legislation requiring the reporting of dairy product inventories and prices. The law gave the USDA the authority to require dairy manufacturing plants to report any data having an impact on product prices, including both sales and products stored in inventory. That data was to be subject to mandatory reporting and auditing.
But because of confusion and delays over the intent of the legislation, NASS still does not have the full ability to audit such data, meaning the accuracy of its current reports may be suspect. Such was the case in 2000, when a warehouse reporting error resulted in a 32 percent miscalculation in domestic butter stocks. A similar situation occurred in 1999, when millions of pounds of cheese suddenly appeared in the NASS cold storage report. Both errors resulted in a sharp drop in farm-level milk prices.
“The sad thing is that the tools to prevent these types of gaffes already exist — it’s merely a matter of putting them into use,” Kozak said. “If there is anything good that can come from this debacle, it will be the implementation of the law that our industry asked for — and Congress passed — nearly seven years ago,” Kozak said.